Sony may step up its game with PlayStation 4

New videogame console to be unveiled in New York on Wednesday

By

DanGallagher

Getty Images

Sony Corp CEO Kaz Hirai is expected to unveil the company’s new PlayStation videogame console at an event in New York City on Wednesday.

SAN FRANCISCO (MarketWatch) — Sony Corp. is expected to unveil its next PlayStation console this week, hoping to breath fresh life into a videogame business that has been racked by slowing sales and growing questions about the future of dedicated home consoles.

The new console — what many have already dubbed the PlayStation 4 — is not expected to go on sale until sometime this fall. That would put it seven years after the launch of the PlayStation 3.

During that time, Sony
SNE, -2.64%6758, -1.45%
has sold about 77 million units of the console globally but has watched its lucrative game business come under challenge from Microsoft’s Xbox, as well as seismic changes in the overall industry as smartphones and tablet have become powerful game platforms in their own right — with games themselves frequently sold for $1 or given away.

That has put pressure on Sony as well as its peers to convince gamers to continue to pay premium prices for high-definition, immersive game experiences. The companies are also working to put their consoles front-and-center in the home as entertainment hubs — and as possible replacements for the set-top boxes that cable companies distribute as part of their services.

Sony to Unveil PS3 Successor

(5:26)

Sony is set to unveil its long-awaited successor to the PlayStation 3 on Feb. 20. The WSJ's Daisuke Wakabayashi has the details on the new videogame console.

“Sony and Microsoft have to convince consumers that there is a compelling reason to upgrade to the new hardware,” videogame analyst Colin Sebastian of Robert W. Baird told MarketWatch.

The event will get under way on Wednesday at 6 p.m. ET. in New York City.

Little is known officially about the new console. Various leaks across gaming and gadget blogs have indicated that Sony may shift to using off-the-shelf chip components, with Advanced Micro Devices
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expected to win the key slots for the central-processor (CPU) and graphical-processor (GPU) units.

This would represent a shift from the proprietary Cell processor Sony developed specifically for the PS3, but theoretically allow the company greater flexibility to keep the console’s specs up-to-date through its life-cycle at a much lower cost than using a proprietary chip. It would also simply the development process for game makers.

“You’re going to get a box that’s 4-8 times faster than what’s currently out there, with a commodity CPU-GPU combination,” Michael Pachter of Wedbush Securities told MarketWatch. He said the main technical innovation the new console may offer “will be to up the frame-rate and have more things on the screen at once.”

The challenge for the PlayStation 4, as well as the new Xbox that Microsoft
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is believed to be working on, will be to deliver the same level of performance leap with the new console generation. The previous generation of consoles ushered in high-definition gaming, and the series before that helped introduce online multiplayer options.

“Nothing is going to be as striking as the move from standard-def to high-def. That was huge,” said Doug Creutz of Cowen & Co.

Other changes may include the ability to play games that aren’t fixed to a plastic disc bought at a retailer. The Wall Street Journal reported over the weekend that the new PlayStation will also offer games that are streamed over the internet in real time, with Sony making use of its acquisition of cloud gaming firm Gaikai Inc. in 2012. Read WSJ report: Sony moves a step closer to its game vision.

Garnering the early support of game publishers like Electronic Arts
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Activision Blizzard
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Take-Two Interactive
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and Ubisoft
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will be important, as game software will be needed to help sell the new console. But those publishers face pressures of their own, with competition in social and mobile channels threatening their established retail businesses.

Pachter of Wedbush said the publishers will continue to support current consoles through the end of the year — especially with major releases in the pipeline for 2013 that include “Grand Theft Auto V,” coming in September, and re-curing hits like “Call of Duty” and “Battlefield.”

“The old consoles are still relevant,” he said, adding that even new games — like one expected from Bungie through a partnership with Activision this year — will want to establish themselves with the larger installed base of current devices.

Reuters

Sony CEO Kaz Hirai introduces the PlayStation Vita hand-held at the E3 show in Los Angeles on June 6, 2011.

But one area ripe for innovation is in multimedia, making game consoles into the central hub for home entertainment. Sebastian of Baird says that Sony has been losing share across the consumer electronics landscape, as more competitors have also arisen in segments like TVs. Therefore, he says the new console must also offer muti-media capabilities “that can make the consumer proposition for the front of the living room.”

Creutz said he believes both Sony and Microsoft are in discussions with cable providers to allow the consoles to channel cable content along with games and other Web-based applications like Netflix through the devices.

“I think the end-goal here is for these boxes to replace your set-top box,” Creutz said, adding that firms like Microsoft and Sony are moving to get ahead of what is expected to be a new TV product from Apple
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possibly coming out this year.

“They want to dominate the living room, and the main competition for that is Apple,” Creutz said.

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